Extended Stay America, Inc. And Studio Plus Hotels, Inc. Announce Merger

FORT LAUDERDALE, Fla., and LEXINGTON, Ky., Jan. 16 / Extended Stay America, Inc. STAY and Studio Plus Hotels, Inc. SPHI, announced today that they have signed a definitive agreement providing for a merger of the two companies. Under the agreement, Extended Stay America will issue 1.2272 shares of its common stock for each of the approximately 12.5 million issued and outstanding shares of Studio Plus in a transaction valued at approximately $290 million based on today's closing price. The transaction will be accounted for as a pooling of interests.

Studio Plus, a leading owner and operator of mid-priced extended stay lodging facilities, currently has 35 operating hotels, 11 hotels under construction and options to purchase 28 sites. The company had previously announced its intention to have 65 operating hotels by year end 1997. The company operates primarily in the Midwestern and Southeastern United States.

George D. Johnson, Jr., President and Chief Executive Officer of Extended Stay America, stated: "We are delighted with this agreement and with the opportunity to bring such a fine company into our family. The Studio Plus product is of extremely high quality and our entry at this mid-price point is consistent with our long term strategy for development of the extended stay lodging market. Buddy has built a fine organization and they will be a valuable asset as we continue our growth."

Norwood Cowgill, Jr., Chairman and Chief Executive Officer of Studio Plus, added: "I can't think of a better way to maximize the continuing growth of Studio Plus than by joining George and his team at Extended Stay America. In just two short years, they have accomplished what many said couldn't be done. Their capabilities to expand nationally are truly impressive and will have an immediate impact on the growth of Studio Plus." Mr. Cowgill will join the Board of Extended Stay America, Inc. and will continue as Chief Executive Officer of Studio Plus.

The agreement is subject to the approval of shareholders of the companies and other customary terms and conditions and is expected to be completed in the second quarter of 1997.

Extended Stay America is the nation's fastest growing provider of economy extended stay lodging and as December 31, 1996 had 40 properties open in 16 states, 50 properties under construction in 26 states and options to purchase 106 sites in 30 states